The Funcas Forecasts for Spain’s Economy in 2022 to 2023
The Savings Banks Foundation, known as Funcas, raised its 2022 growth outlook for Spain by three tenths, bringing the expansion projection to 4.5 percent. Yet the organization notes that this stronger pace applies to a year that still shows only a modest gain in comparison with prior expectations. For 2023, Funcas lowers its forecast to 0.7 percent as domestic demand cools amid ongoing uncertainty from the war in Europe and the rise in prices that hurts consumer purchasing power.
Funcas’ analysts also warn that the GDP could dip in the last quarter of this year and the first quarter of next year, forecasting a brief period that could resemble a technical recession. Although this would mark a setback, Funcas emphasizes that the decline would be manageable on a longer horizon, especially when compared with other euro area economies. The general takeaway is that Spain may post a small but positive growth rate of about 0.7 percent, even as some peers struggle with weaker prospects.
The presentation of these estimates came from Funcas’ leadership, with Carlos Ocana, the foundation’s general manager, and Raymond Torres, head of the International Situation and Economy at Funcas, speaking at a press briefing about the 2022-2023 forecast update for Spain. The message highlighted ongoing weaknesses in the Spanish economy and the impact of rising prices on household budgets.
Looking at household purchasing power, Funcas notes that inflation remains a drag. The rise in consumer prices has eroded the real value of earnings, reducing how much families can save and spend from the buffers built up during the pandemic. While employment is projected to stay relatively firm, Funcas expects around 220,000 jobs to be created between the second quarter of 2022 and the fourth quarter of 2023, with wages increasing roughly 3.5 percent next year. Still, this wage growth is not seen as enough to fully restore the purchasing power that households have lost in the current environment.
The inflation outlook from Funcas is striking: an average inflation rate near 9.1 percent for the current year, easing to about 4.8 percent in 2023. These inflation figures frame the conditions under which consumption, investment, and price dynamics will operate, influencing both fiscal policy and the broader economic trajectory.
On the monetary side, Funcas projects that interest rates will continue to edge higher, potentially reaching around 2.5 percent in the upcoming period, specifically by the second quarter of 2023. After that point, the forecast assumes a period of stabilization with rates unlikely to undergo major shifts in the near term. This path for financing costs has implications for borrowing, housing, and business investment, all of which feed back into overall growth and consumer confidence.
In summary, Funcas presents a cautious but not bleak outlook for Spain. Growth remains modest, inflation stays high but gradually moderates, and employment should hold steady with incremental wage gains. The combination of these factors suggests a trajectory in which Spain manages to navigate price pressures and external uncertainty while still achieving a small positive expansion in the near term, even as risks from weak domestic demand and higher rates linger. Analysts emphasize that the scenario could evolve with shifts in energy prices, international demand, and policy responses, but the baseline remains a subdued but resilient economy that avoids a sustained downturn.